Oil posts biggest weekly gains in more than a year before hurricane
Oil prices rose 2% on Friday, posting their largest weekly increases in more than a year, as energy companies began shutting down US production in the Gulf of Mexico ahead of a major hurricane expected to strike early of the next week. Brent futures rose $ 1.63, or 2.3%, to $ 72.70 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 1 , $ 32, or 2.0%, to settle at $ 68.74. This was the highest close for Brent since August 2 and for WTI since August 12. For the week, Brent gained over 11% and WTI rose over 10%, which was the biggest percentage of weekly gains for the two since June 2020.
Oil producers shut down 59% of Gulf of Mexico crude production on Friday as the ninth storm of the season neared major U.S. offshore oil fields, according to the Bureau of Safety and Environmental Enforcement (BSEE).
Oil prices were also supported by a drop in the US dollar to a one-week low against a basket of other currencies following comments from US Federal Reserve Chairman Jerome Powell. A weaker US dollar makes oil cheaper for holders of other currencies. Powell, in a speech that asserted an economic recovery underway in the United States and explained why there was no rush to tighten monetary policy and offered no signal as to when the central bank was considering cutting its asset purchases beyond saying it could be “this year”.
U.S. oil rigs rose five to 410 this week, their highest level since April 2020, energy services firm Baker Hughes Co. said In August, drillers added 25 oil rigs, the most in a month since January, increasing the number of oil rigs for 12 consecutive months for the first time since July 2017.
Going forward, Opec + will meet on September 1 to discuss its plan from July to increase production by 400,000 barrels per day each month for the coming months.
Asian liquefied natural gas (LNG) prices rebounded last week to their highest level since January, as spot demand emerged even as inventories remained low. The average LNG price for October delivery in North East Asia was estimated at around $ 17.20 per million British thermal units (mmBtu), up $ 1.70 from the previous week, industry sources said. Still, demand growth for China’s LNG imports this winter is expected to be stable from the previous winter amid an economic slowdown and high gas prices, sources said. Demand from Turkey was also strong, with state-owned energy company Botas seeking 30 shipments to deliver between September and March, sources said. Yet several tenders capped price gains last week. Novatek offered cargo for October delivery to Northeast Asia, while Petronas in Malaysia sold cargo from its floating platform for October delivery, sources said. Oman LNG has offered a shipment to be delivered in late September, they added.
U.S. natural gas futures jumped more than 4% on Friday to hit a new 32-month high on forecasts that the weather will stay warmer than normal through mid-September and fears that the Hurricane Ida is shutting down production in the Gulf of Mexico when it hits the Louisiana area as the main storm early next week. On its last day as a first month, gas futures for September delivery rose 18.6 cents, or 4.4%, to $ 4.37 per mmBtu, their close highest since December 2018 for the second day in a row. The October contract, which will soon be the first month, rose about 17 cents to $ 4.39 per mmBtu. Analysts have noted that storms in the Gulf of Mexico like Ida can reduce gas prices and demand by causing power outages and the closure of LNG terminals, but they can also increase prices by shutting down production. from the Gulf Coast. According to federal data, about 2% of total US gas comes from the federal offshore Gulf of Mexico, while another 8% comes from Louisiana on- and offshore. With European and Asian gas both trading at over $ 16 per mmBtu, compared to just over $ 4 for U.S. fuel, analysts said buyers around the world would continue to buy all the LNG that United States can produce.
This article was provided by the Abdullah bin Hamad Al-Attiyah International Foundation for Energy and Sustainable Development.